Final Countdown to DFARS Cybersecurity ComplianceMost federal defense contractors are aware that December 31, 2017, is the deadline for them to comply with National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations. However, many defense contractors (understandably) remain perplexed about not only the details of the requirements, but the basics. This article provides answers to some of the most basic, yet commonly asked, questions regarding the new requirements.

In a nutshell, what is required by December 31, 2017?

The Department of Defense amended the Defense Federal Acquisition Regulation Supplement (DFARS) in 2016 to provide for the safeguarding of Controlled Unclassified Information when transiting through or residing on a contractor’s internal network or information system. DFARS Clause 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, requires contractors to implement NIST SP 800-171 to safeguard “covered defense information” that is stored on or processed in their internal network or information system. Additionally, DFARS Clause 252.204-7012 requires contractors to report, within 72 hours of discovery, any cyber incidents that may have affected “covered contractor information systems.” DFARS Clause 252.204-7008, Compliance with Safeguarding Covered Defense Information Controls, states that, by submitting an offer, “the Offeror represents that it will implement the security requirements specified by [NIST SP 800-171] . . . not later than December 31, 2017.”

What if my company cannot fully comply by December 31, 2017?

A December 2016 update to NIST SP 800-171 (Revision 1) provides some relief to covered contractors who cannot fully comply with the requirements by December 31, 2017.  Revision 1, which provides guidance on the use of System Security Plans (or SSPs) and Plans of Action and Milestones (or POAMs), states in relevant part:

Nonfederal organizations should describe in a system security plan, how the specified security requirements are met or how organizations plan to meet the requirements. The plan describes the system boundary; the operational environment; how the security requirements are implemented; and the relationships with or connections to other systems. Nonfederal organizations should develop plans of action that describe how any unimplemented security requirements will be met and how any planned mitigations will be implemented.

Then, in September 2017, the Director of Defense Pricing/Defense Procurement and Acquisition Policy issued a memorandum addressing implementation of DFARS Clause 252.204-7012. This memorandum provides additional guidance on SSPs and POAMs as follows:

To document implementation of the NIST SP 800-171 security requirements by the December 31, 2017, implementation deadline, companies should have a system security plan in place, in addition to any associated plans of action to describe how and when any unimplemented security requirements will be met, how any planned mitigations will be implemented, and how and when they will correct deficiencies and reduce or eliminate vulnerabilities in the systems. Organizations can document the system security plan and plans of action as separate or combined documents in any chosen format.

The memorandum further states that a “solicitation may require or allow elements of the system security plan which demonstrates/documents implementation of NIST SP 800-171, to be included with the contractor’s technical proposal, and may subsequently be incorporated (usually by reference) as part of the contract[.]” However, the memorandum reiterates that “DFARS Clause 252.204-7012 requires the contractor that is performing a contract awarded prior to October 1, 2017, to notify the DoD [Chief Information Officer] of any requirements of NIST SP 800-171 that are not implemented at the time of contract award.”

Must my subcontractors comply?

Yes. Covered defense contractors must include DFARS Clause 252.204-7012 in subcontracts, or “similar contractual instruments,” for “operationally critical support” or for which performance will involve “covered defense information.” Among other things, covered contractors must also require subcontractors to “[p]rovide the incident report number, automatically assigned by DoD, to the prime Contractor (or next higher-tier subcontractor) as soon as practicable, when reporting a cyber incident to DoD” as required in DFARS Clause 252.204-7012. Moreover, given that most covered prime contractors will be required, either explicitly or implicitly, to certify compliance with the requirements, prime contractors would be wise to require subcontractors to certify their own compliance to the prime contractor.

What are some of the consequences for non-compliance?

Potential consequences for noncompliance with DFARS Clause 252.204-7012 and NIST SP 800-171 include, but certainly are not limited to, losing a contract award; being subjected to a bid protest; being found to have breached an awarded contract; being terminated for default; and/or negative past performance reviews. Potential consequences for falsely certifying compliance may include, but are not limited to, False Claims Act liability; liability under the various false statement statutes; default termination; negative past performance reviews; suspension; and/or debarment.

Wait, I have more questions!

If you have any questions about any of the foregoing requirements or any related issues, please do not hesitate to contact Aron C. Beezley, the head of Bradley’s Government Contracts Cybersecurity team.

Bradley to Present at the 32nd Annual Construction SuperConferenceThree Bradley attorneys will participate in two different presentations at the 32nd Annual Construction SuperConference in Las Vegas, Nevada from December 4 – 6, 2017.

Bradley partners, David Owen and Jim Archibald, will facilitate a panel discussion on subsurface conditions entitled “Taking on Subsurface Risks: How to Allocate Subsurface Risk and Lessons Learned from an Owner, Contractor and Geotechnical Expert.” David and Jim will be joined by Tim Fisk from NRG Energy, Inc., Wilson Nash from Brasfield & Gorrie, Inc., and Dr. Dan Brown from Dan Brown & Associates.

Also, Bradley partner, Doug Patin, will present in a conference session regarding claim modeling and presentation entitled “High Tech Tools by Experts in Construction Litigation and Arbitration: How to Do It Right and How to Tear It Down.” Doug will be joined by Charles Choyce from Berkley Research Group, Benjamin Crosby from W.G. Yates & Sons Construction, and Anthony Meagher from DLA Piper.

In the session on subsurface conditions, David, who is also a registered professional engineer, will moderate the discussion, and Jim will provide a legal analysis of the different ways to allocate subsurface risks in the prime contract. Mr. Fisk, as an owner representative, will discuss some major subsurface issues that he has encountered on mega-construction projects. Mr. Nash, as an in-house lawyer for a general contractor, will speak about his experiences with subsurface conditions and some of the strategies that general contractors can apply to successfully mitigate risks. Finally, Dr. Brown, who is a renowned geotechnical expert and civil engineer, will present some subsurface case studies and explain how to interpret and utilize a geotechnical report.

In the session on claim modeling and presentation, the panelists will discuss how to effectively use graphic presentations to support claims and monitor the progress of the construction work. They will also analyze the effectiveness of contemporaneous Building Information Modeling, Critical Path Method scheduling, and 4-D presentations.

The panelist will also explain some of the mistakes that contractors make during construction that can have an adverse impact on their claims. Additionally, they will recognize some “best practices” and share examples where the panelist or their expert successfully resolved or presented a claim by appropriately using “high tech tools” during the construction or claims process. Finally, the attorneys on the panel will discuss how to attack 4-D presentations, and other advanced models or schedules, through effective cross-examination.

We look forward to the upcoming Annual Construction SuperConference and the chance to connect with our clients and colleagues.